Wednesday, November 14, 2012

virtual pay

A glass of water, 5
15 min of idle time, 3
Fresh air, 3
An online news article,3
A song streaming from an online radio station, 2
A youtube clip, 3
A news tweet, 1
A piece of email, 1

The Long-Tail Economy: An Inspiring Concept

A model for online retailing/entertainment industries: Amazon, iTunes, YouTube, and Netflix.

Unlimited shelf space: From "hits vs. misses" to seemingly unlimited choices

The death of distance: Easier to get a critical mass in a much larger geographic market 

Tools for content access: Search, algorithm-based recommendations, user reviews


Does the availability of options and navigation tools shift consumption from the head to the tail?

Some argue that the greater choice, navigability, and searchabilty will actually strengthen the hits relative to the niche products!

Empirical evidence:

Therefore, it is NOT any easier to be a niche content producer financially than it was in the old media environment. 

Three business models for online music in practice:
  • iTunes
  • Pandora
  • Spotify
Pandora vs. Spotify

Who Really Profits from Your iTunes Downloads?

Implications of audience segmentation for ad-supported media

Long Tail - Wag the Head?

I agree that ‘Long Tail’ by Anderson is a compelling idea, which clearly shows how digital technology might be changing both markets and business models. It’s a ground breaking work on new business principles. However, I am also interested in Anita Elberse’s refutation that “the web may have actually increased attention to mainstream content, often referred to as the "head," while Anderson believes that consumers have used the internet to embrace niche content.” According to her, the continued dominance of big media and mainstream content has much to do with a human desire to experience culture communally. She argues, thus, that "the internet simply amplifies that drive." In this context, can we conclude that the (long) tail really is wagging the head with the advent of digitized era?

Spotify and the successful failure of the long tail

To me, nothing exemplifies the potential and shortcomings of the "long tail" approach as well as Spotify. For the uninitiated, Spotify is a streaming music service that lets you listen to a massive library of music (legally) over the Internet whenever you want. It has a free version (which is ad-supported) and several tiers of paid editions (which allow mobile access, offline access, and other features).

For me as a music consumer, Spotify has been a long-tail paradise. Over the past year and a half, I've used it to explore all kinds of genres and sub-genres of music -- many of them obscure records or album tracks that I'd never hear on the radio and probably wouldn't find at most record stores, either. I've done a ton of Spotify listening, and almost all of it has been deep in the long tail. It's all listening that simply wouldn't have been possible 20 years ago, at least not without thousands of dollars to buy and try out all of those albums.

But for the media companies themselves, my long-tail indulgence has been almost worthless in monetary terms. Spotify pays labels per listen, which in turn distribute that money to their artists per listen as well. According to this article, each of my plays of a song on Spotify Free is making the artist somewhere between 1 cent and 1/10 of 1 cent. Don't spend it all in one place, guys! I could listen to thousands of songs (and I have), and it would still only add up to a few dozen bucks collectively for all of those artists.

But that just means Spotify is making a bunch of money off me instead, right? Wrong. Since I'm not willing to pony up for a monthly fee (I don't have a smartphone and my laptop is always connected to the web, so mobile and offline access don't mean much to me), Spotify has actually been losing money on me.

So whose perspective do we take on the long tail? For me as a consumer, it's been an amazing development. But as a business model, at least in my case, it's worthless. There are surely other, better ways to make money off the long tail (even Spotify's subscriber services are making gobs of money), so this isn't necessarily an indictment of the long tail as a whole. But it's one data point suggesting that it's quite a bit more difficult to make money off the long tail as Chris Anderson makes it sound.

Tuesday, November 13, 2012

Who and what to blame?

The "ceiling effect" in profitability of physical mainstream media products makes sense since (1) there are limits to the common denominator formula (2) physical markets tend to be much smaller than online markets. 

But these limitations don't apply to online stores. On the internet, while online stores can still carry "mainstream" products to aim at the common denominator audiences, the online environment eliminates the two possible ceiling effects with 1) low to zero cost for storage and distribution and 2) elimination of geographic markets. In other words, online media stores have the best of both worlds in terms of offering endless content amd having countless potential consumers, both of which are reason enough for the triumph of long tail effects.

I think the competition media companies in the physical world whines about (for the lack of a better expression)  is not necessarily one of "online vs. traditional" per se - but one of "who is better at satisfying the needs, or even quirks, of their customers/audiences?"  The news industry faces the same problem.

Legacy media industries, arguably, never took the time to fully understand consumers/audiences in their geographic region to cultivate loyalty and rapport, and to improve customer/audience satisfaction. For example, Borders in Brooklyn, NY should not carry the same items as Borders in Lubbock, TX, but chances are they probably did carry identical things for the reasons Chris Anderson detailed, and I think this is really a shame because "localness" is one of those attributes that online stores can never take away from physical stores. 

In sum, market negligence in the physical world is a worse enemy than the "traditional vs. digital" debate accounts for. In other words, in order to stay competitive in the 21st century, unless physical stores can carry as much content choices as online stores do to entice their customers/audiences, they better figure out what their unique attributes are -- stop talking in terms of "what I can offer you" and start elaborating on "how I can meet your X and Y needs in ways that the online stores cannot." 

Monday, November 12, 2012

The community's role in newspapers' technology use

For my final paper, I have one big, huge, overarching question and a whole bunch of different ways to tackle it. Here's a very short version of what I'm looking at -- I'd love to hear your feedback.

My overarching question: “What leads newspapers in different geographical and social settings to use technologies in different ways?” The key area of newspapers I'm interested in are community newspapers, but this question would allow me to compare those newspapers to other types as well.

For me, that means the dependent variable would be use of interactive technology -- which could be measured through a content analysis of newspapers' websites, mobile apps, and social media presences.

Where things get sticky is with the independent variable. There are a number of different ways I could go with this:

Attributes of the newspapers' geographic community. Possible research questions here:

What is the relationship between a community’s technological access and the use of technology by its newspapers? Could be measured through public FCC broadband access data.

What is the relationship between a community’s structural pluralism and the use of technology by its newspapers? Could be measured through Census data regarding race, education, poverty levels, and occupational classification.

What is the relationship between a community’s media use habits and the use of technology by its newspapers? Could be measured on a case study level, through a community survey.

The other area would be community journalists’ perceptions of their geographic community. Possible research questions:

What is the relationship between journalists’ perceptions of their community’s technology use and their own use of technology within community newspapers?

How do journalists’ perceptions of community technology use interact with other economic and professional factors in influencing their use of technology?

Both of these could be measured by surveying journalists about their perceptions of their community's technology use and their decision-making process regarding use of technology.

A lot of good (?) ideas, but not much direction. I could use some soon!

Blind to Media Economics?

At the end of 2010, Korean incumbent government granted four conservative national dailies the new licenses to operate new cable TV channels. Korean major newspapers had been desperate to win the licenses because they believed that the new broadcasting business will help overcome the recession of newspaper industry and leverage their print dominance to television. They, thus, had competed for the newly-opened cable television ever since 2009, when the government lifted Korea’s traditional cross-ownership ban that had prevented a corporation from owning both newspapers and broadcasting company at the same time.

The government’s decision was made after years of severe nationwide debate, division and cross-industry bickering. The government contended that the deregulation was for producing better contents that would help the Korean media companies strengthen international competitiveness and become global media companies.

However, there had been widespread concern over not only the deleterious effects of the new channels on journalism such as the harm to diversity in public opinion but also the thinly-stretched budgets of advertisers.

Although it was very questionable whether the market could create additional TV advertising spots from advertisers, the government claimed that the new channels would generate enough advertising revenue. However, they have been operating at a loss due to the very low viewer ratings and poor advertising spots. Even though the new channels have greatly lowered their price for advertising spots, they are keeping “drowning in red ink.”
The government and the newspapers really did not know that television advertising is price inelastic? Or, just because of the political thinking, they were blind to media economics? 

This study will explore how the newspapers depicted the new cable TV channels, which show whether and how much they concentrated on media economics perspective regarding their approach to new business model.

<Research Question>

RQ1: What differences, if any, were there in Korean major newspapers’ frames of the new cable TV channels?

RQ2: What differences, if any, were there in Korean major newspapers’ tone of stories about the new cable TV channels?

RQ2a: What differences, if any, were there in Korean major newspapers’ tone of the frame used most frequently?

RQ3: When Korean major newspapers covered the new cable TV channels, what sources did Korean major newspapers mainly depend on?

RQ4: When Korean major newspapers covered the new cable TV channels, to what extent was such coverage based on media economics data?

From meaning to perceived importance: Predicting news consumption with news utility (working title & research idea)

-- Story line --

Economics suggest people innately seek to maximize utility, but scholars rarely discuss the utility of news to audiences. They often explore "why people consume news" (which has proven to have lukewarm predictive power from the uses and gratifications literature) but not how useful news is to audiences. This study offers two ways to understand news utility (what is news and how important is it?), and examines how they predict news consumption.

-- Research questions --

RQ1: What does "news" mean to audiences?

RQ2: How important is news to different news audiences? 

RQ3: How does the audience's definition of news influence perceived importance of news? 

RQ4: How does the audience's definition of news influence their news consumption from a) local newspapers, b) national newspapers c) network national news, d) cable (CNN, MSNBC, FOX), e) local TV, f) social media (Facebook & Twitter), g) aggregators (Yahoo & Google) ? 

RQ5: How does perceived importance influence news consumption from a) local newspapers, b) national newspapers c) network national news, d) cable TV, e) local TV, f) social media, g) aggregators?

Attention Economy

(Sorry for the long wind-up, it was mostly for my sake, not yours. Skip to paragraph 3 if you wish to cut to the chase.)

People may not be willing to spend their money online or on mobile devices. But they may be willing to spend their time. My question is where that time is coming from.  In economic terms, attention is a scarce resource that consumers decide how to distribute based on their desires to maximize utility. To focus on a narrow application of this idea, a person might decide to dedicate a certain portion of their attention to news consumption. This news consumption might be entirely from a morning newspaper, or split between the Internet and local TV news, or any other combination.  If a person wanted to use a new medium for news, say because they received an Amazon Kindle for Christmas, they would have to cut back on other media use because their attention is a scarce resource.

But I argue that attention is not as fixed a resource as some might suspect. First, increasing media use may take attention from other areas of life (a person may go out less, for example).  Of course, there are still only 24 hours in a day, so at some point there are no other parts of the pie to steal from. But secondly, what if new technologies introduce efficiencies into the attention system such that person has more expendable attention? Instead of simply waiting in line – what used to be attention essentially wasted – people frequently consume media on portable electronic devices. Not that this wasn’t possible (people have always brought books to waiting rooms) but it now requires no advance thought because a cell phone is, for most people, a constant companion (unlike a book, for most people).

It may be that, in a world of increasing choice, people are more able to exercise their preferences (as Prior says), and hence simply swap one medium or news source for another that better suits their preferences. But it could also be that access to the Internet anywhere has fundamentally changed how and when we choose to consume media, pushing media consumption into heretofore media-less areas of our lives. I find some evidence of this in my study of how journalists use smartphones and tablets, which enable them to work at times and in places where it was previously impossible or prohibitively inconvenient. This new convenience of Internet access may be wiggling its way into the nooks and crannies of our lives, leading to a surge in busy-ness.

Proposition: Mobile Internet technologies are not “or” media, but “and” media. (The language of substitute and complementary would seem to apply, but I think that would imply some sort of relationship between the media. My sense is that they are NOT related, that mobile internet consumption fits into a new gap that it created for itself.)

Data required: Media usage across several years, but preferably at least the last five years. Hours working. Leisure time and recreation data. Some measure of busy-ness, maybe stress or anxiety could be a proxy here. The idea is to get a sense of how much attention people have to spend, and then decide whether that has changed with the adoption of mobile Internet devices.

Sunday, November 11, 2012

Competition between SMS and social message applications

Research Topic:

Text messaging, also known as Short Message Service (SMS), is a important profitable service to mobile service providers, which contribute about 20% revenue of mobile service providers's total revenue. However, SMS faces huge challenge to the social messaging applications on smartphone and social networking services, such as: WhatsApp, LINE, Facebook, Twitter, etc.

Last month, OVUM released a report, which forecasted that social message applications would make mobile operators losing the revenue about US$54 billion by 2016.

The different pricing types between text messaging and social message application could be one of the main reasons why social message applications grow up so quickly. Traditional text messaging was charged by usage, although there are some wireless operators have provided unlimited text messaging services with a flat monthly rate, however, consumers only have to buy the applications (sometimes consumer can even download the applications freely), than use the social message services on smartphone without paying any fee.

To consumer, social messaging application could be a more economic choice, however, in some countries, mobile operators were highly regulated by government, especially the pricing. For instance, all of the rate plans of mobile operators have to get the permission from NCC (National Communications Commission) in Taiwan, and once a service were reduced the price will never be permitted to raise the price again. However, the regulators cannot regulate the applications providers which might lead to an unfair competition environment.

Research Questions:

How to create a fair competition environment by regulations between mobile operators and applications providers? Should regulators dismiss from the pricing regulation? What is most benefit to consumer? How do the mobile operators deal with the challenges from application providers?

What kind of data I need?

  • SMS usage and revenue statistics in five years.
  • The changes of mobile operators revenue combination.
  • The performance of social messaging application companies.
  • The pricing regulations of mobile operators in main countries.

What’s the storyline

  1. The emergence of social messaging applications.
  2. The decreased of short message services.
  3. The correlation between social messaging applications and short message services.
  4. How to make a fair competition environment which can benefit the consumer, operators and industries.